I-O Programs

Employment Testing Overview

What is an employment test?

A test can be defined two different ways. From an assessment standpoint, a test is a standardized series of problems or questions that assess a persons knowledge, skills, abilities, or other characteristics. From a legal standpoint in the U.S., the Uniform Guidelines on Employee Selection Procedures (1978) defines a test as any method used to make an employment decision. Thus, a tool could be a test under one definition but not under the other (resume reviews are a test from a U.S. legal standpoint, but are typically not standardized in such a way as to be considered a test by most people involved in assessment). In this document, when we refer to employment testing, we mean standardized tools used in hiring, promotion, demotion, membership, referral, retention, and licensing and certification decisions.

There are different kinds of tests. Tests vary according to their mode of administration (e.g., paper and pencil vs. Web-based), their content (e.g., interpersonal skills, mathematical ability), their level of standardization or structure, their costs, their administrative ease, and many other factors. These factors are discussed in detail elsewhere (for more information, see Types of Employment Tests).

When do employment tests make the most sense?

Employees affect an organizations performance and profitability. Hiring or promoting people who are unsuitable costs time, money, and potential new business. Carefully developed and administered employment tests can provide organizations with a way to decide systematically and accurately which people have the ability to perform well on the job, will not turnover, wont engage in counterproductive behaviors, or will be able to learn from training programs. Tests can also benefit individuals who are better matched to positions for which they are suited and in which they will wish to remain.

Reasons for testing

Some of the more commonly cited reasons for testing are:

Testing leads to savings in the decision-making process. Employment tests can be a cost effective way to pare down the applicant pool. Tests can make the decision process more efficient because less time is spent with individuals whose characteristics, skills, and abilities do not match what is needed. However, some tests do require more time up-front with individuals to determine who is and who isnt qualified. In these cases, tests can still result in savings from not training and compensating individuals whose productivity would be low or who would not remain on the job.

The costs of making a wrong decision are high. For certain employment decisions, a wrong decision can be very costly in terms of training costs, errors made by a poor performer, costs of replacement, etc. For these types of decisions, investing in testing may be seen as a particularly worthwhile endeavor if testing reduces the number of wrong decisions.

The job requires attributes that are hard to develop or change. Tests are often used for assessing characteristics that cannot be developed through training but are acquired over long periods of time or even a lifetime (e.g., personality traits, in-depth knowledge of a profession).

Hard-to-get information can be obtained more easily and efficiently. One important advantage of using employment tests is that they can often provide information about an individual that is not easily obtained using other methods, or that would be much more costly to obtain by other means.

Individuals are treated consistently. Using standardized tools in employment decision-making ensures that the same information is gathered on each individual and used in a similar way in decisions. Employers often turn to testing because of the unfairness of less standardized processes, in which individuals are not all treated in a similar way and similar information is not gathered on all individuals. Subjective biases can easily creep into decisions if the process for making decisions is unstandardized.

There are a lot of applicants. Sometimes the sheer number of individuals to consider for an employment decision leads an employer to choose testing as the most efficient and fair means of making a decision in a timely manner.

Reasons for NOT testing

Some of the most commonly cited reasons for not testing are:

Costs. While tests vary in their costs (e.g., developing customized tools costs more than purchasing off-the-shelf products, extensive assessments typically cost more), the cost of testing may be easily offset when considering costs of low productivity, errors, retraining times, and turnover. For example, conservative estimates of the cost of turnover range from 1/3-1/2 of the annual salary of the employee that is being replaced. The costs of replacing management, executive and highly skilled talent can easily be 1-2 times the annual incumbents salary. Further, the costs associated with hiring a wrong employee who makes mistakes can be quite high. Testing can be a valuable investment for organizations to make in hiring and retaining talent.

Fear of legal action. Sometimes concerns are raised about the legality of using tests in hiring. As with any other method of making employment decisions, tests can be scrutinized if there is a belief that discrimination in employment decisions has occurred. Adverse impact exists when the selection rate of a given demographic group (e.g., females vs. males, whites vs. blacks, etc.) is substantially lower than the selection rate of the majority group. While any selection procedure may show score differences that result in exclusionary effects upon a group, some types of tests (e.g., physical ability, cognitive ability) are more likely to show such score differences. Despite these differences, these tests are often accurate predictors of job performance and other outcomes of interest. Before using a test, it is important to anticipate whether or not adverse impact might occur and to consider ways that minimize any exclusionary effects while preserving the ability to make valid inferences based on test scores. If adverse impact does occur, it is important to demonstrate that the inferences made based on test scores are appropriate. By doing this, a company has the data to support the use of the test. U.S. case law and guidelines have clearly established that well-developed and validated tests can withstand legal scrutiny. Employers should have clear documentation regarding any tools they use in employment decision-making.

Practical constraints. Tests may not be the best choice if not many individuals are being considered in a particular employment decision, if the resources to properly administer the test are not available, or if the timing and logistics of the decision-making process preclude the use of an appropriate test.

The current decision-making process would not be improved upon by the addition of a test. Employers may believe they already have a quality decision-making process in place and a test would simply add costs and time with no gain in decision accuracy. Often, however, this belief has not been well-assessed, as organizations do not always track the information necessary to actually evaluate how well their employment decision-making processes are working. A proper evaluation of a decision-making process may reveal room for improvement, and often a test is a cost-effective and efficient way to improve the process.

Tests are useful decision making tools in employment contexts. Deciding whether a test is the right solution in a given situation may require professional advice from someone with knowledge of both testing and employment situations. Industrial-organizational psychologists may be helpful in such a situation.